Mnemonics

P E S T E L

The letters are the list: Political, Economic, Social, Technological, Ecological, Legal. In a case, say the letter first and then the justification.

I want (Objective), I do (Scope), I win (Competitive advantage)

Three verbs for the three parts. Attach to 'I win': value proposition plus internal alignment.

H1 defend, H2 build, H3 explore

The number is the distance in time: the higher the number, the further away and the more uncertain.

Realized = deliberate + emergent

Intended strategy is what the top planned; what actually happens is the part of the plan that survives plus what arose on the way.

Forecast = a number, scenario = a story

A forecast predicts one outcome; a scenario lets you rehearse several outcomes without probabilities.

E S B S R: 'Every Strong Boss Starts Racing'

Entry, Substitutes, Buyers, Suppliers, Rivalry. Each letter is a force; always name them by their English name.

S C S A: Scale, Capital, Switching costs, Access to channels

The four sources that keep returning in the marking scheme. Add incumbent advantages and expected retaliation.

Cost low, Value high, Narrow or broad

Cost leadership is about cost, differentiation about value to the customer, focus about a narrow segment. Price is not in it.

Make, Move, Maintain

Creating, delivering and capturing value (value capture): three verbs for three points in the marking scheme.

Back and Forward

Buyers threaten backward integration (back into the chain), suppliers forward integration (forward to the customer).

V R I O: 'Very Real, Is Original?'

Valuable, Rare, Inimitable, Organisational support. A no stops the row; the table tells you what to conclude.

No = disadvantage, V = parity, V+R = temporary, all four = sustained

The number of yeses decides your conclusion: below normal, normal, above normal for a while, above normal lasting.

Sense, Seize, Shift (sensing, seizing, reconfiguring)

Three steps: spot the chance, grab it, reshuffle resources. Always attach a routine to it.

Inside S W, outside O T

Strengths and weaknesses come from the resource analysis (internal), opportunities and threats from PESTEL and Five Forces (external).

C C P: Complexity, Causal ambiguity, Path dependency

The three sources named in the marking scheme. Pick one and link it to the case.

Product exists? Market exists? Both new = diversification

Penetration: old-old. Product development: new product, old market. Market development: old product, new market. Diversification: new-new.

S B E: Search, Bargain, Enforce

Search, bargaining and enforcement costs. Three costs of the market that can make organising in-house cheaper.

F C A: Few alternatives, Complex, Asset specificity

The three characteristics where opportunism grows and vertical integration becomes attractive.

Growth/share: Star high/high, Question mark high/low, Cash cow low/high, Dog low/low

Read growth first (the market), then share. Cash cows pay for the stars and question marks.

H E B A V: Heartland, Edge, Ballast, Alien, Value trap

Five types. Value trap is fit on the opportunities but misfit on the KSFs: attractive but dangerous.

P S D: Portfolio, Synergy, Developer

Small head office = portfolio manager; synergy manager connects units; parental developer has central capabilities.

M C C G: Market, Cost, Competitive, Government

Four groups. Always give the full name, for example cost drivers, and a key term with it.

C A G E

Cultural, Administrative, Geographic, Economic: the letters are already the word. Distance between two countries.

O L I: Ownership, Location, Internalization

Why the firm, where, and doing it yourself. Internalization is keeping control, not going international.

Integration high = Global, Local high = Multi-domestic, both = Transnational

Two pressures, four boxes. International: both low.

Buy, Ally, DIY (greenfield)

Fast, fast, slow. High urgency and uncertainty point to Buy or Ally; soft capabilities are the problem.

High-high = key player, High-low = sleeping giant, Low-high = gadfly

Read power first, then attention. Approach: cultivate support, keep satisfied, information provision.

S A F: Suitability, Acceptability, Feasibility

If one part fails, you do not do it. Acceptability has the 3 R's: Risk, Return, Reactions.

First urgency, then coalition

The first two steps that are missing in the plan when nobody is worried and there is only a newsletter.

3 E's: Engagement, Explanation, Expectations

Involve people, explain why, and make clear what is expected of them.

I D F T: Incremental, Drift, Flux, Transformation or death

The four phases in order. Causes: uncertainty, lock-in, cultural entrenchment and powerful people.

Before = adverse selection, After = moral hazard

Remember the moment relative to the contract: adverse selection before it, moral hazard after it.